- Paradoxical Trend: Despite economic recovery, global M&A activity declined 34% for financial sponsors and 18% for corporates in H1 2024.
- Deal Volumes Subdued: Only 21,000 deals in H1 2024, far below the record 34,000 deals in H2 2021, across sectors like tech and energy.
- Macroeconomic Headwinds: Higher interest rates, tighter financial conditions, market volatility, and inflation created valuation gaps, deterring dealmakers.
- Corporate Strategy Shifts: Focus on organic growth, AI, sustainability made M&A less prioritized as CEOs reassessed growth strategies.
- Regulatory Scrutiny: Stringent antitrust environments and increased regulatory scrutiny discouraged M&A pursuits.
- Historical Parallels: Similar M&A declines occurred after 2008 crisis, dot-com bubble burst, and mid-1990s uncertainty before eventual rebounds.
- Strategic Alternatives: Companies explore joint ventures, partnerships, programmatic M&A to maximize returns amid market challenges.
- Rebound Signals: Q1 2024 saw 20% more $1B+ U.S. deals than Q1 2023, suggesting pent-up demand and potential recovery.
- Lending Landscape: More aggressive lenders and lower debt costs below 2023 peaks could catalyze increased M&A activity.
- Cautious Optimism: While challenges persist, experts predict an M&A rebound as economic conditions stabilize and strategic realignments occur.
References
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